Suit No 76 of 2012/R (Summons No 4327 and 4911 of 2012) [2013] SGHCR 06

Introduction

The first and second defendants respectively made the present two applications, viz, for a stay of the present suit in favour of the courts of the United Arab Emirates (“UAE”) on the basis that the UAE is the clearly more appropriate forum for the trial of the present proceedings, and for the setting aside of an order granting leave to the plaintiff to serve the writ of summons out of jurisdiction on the second defendant pursuant to O 12 r 7(1) of the Rules of Court (Cap 322, R5, 2006 Rev Ed).

Background Facts

The undisputed facts are as follows. The plaintiff, Dinesh Kishin Kikla, is the co-administrator of the estate of his late mother, Lalitha Kishin Kikla, also known as Lalita Kishin Kikla (“Lalitha”). Lalitha was resident in Dubai at all material times. When Lalitha passed away intestate on 10 January 2001, she left behind the amounts of US$4,476,765.32 and US$707,947.99 respectively in two fixed deposit accounts which she held with the first defendant, The Hongkong and Shanghai Banking Corporation Limited, a Singapore registered branch (“HSBC Singapore”). These monies were originally held with the second defendant, but were transferred to HSBC Singapore in or around November 1999. The second defendant is HSBC Bank Middle East Limited (“HSBC Middle East”), a Dubai registered branch of the same banking group.

Lalitha’s husband, one Kishin Kikla, was during all material times a director, shareholder and manager of two companies operating in Dubai, namely, Building Material Enterprises (LLC) and Kikla Trading Company (collectively, “Kishin Kikla’s companies”). Kishin Kikla’s companies were granted overdraft facilities (collectively, the “Overdraft Facilities”) by HSBC Middle East some time in the year 2000 and 1999 respectively. Kishin Kikla was the personal guarantor of the Overdraft Facilities.

Some time before Lalitha passed away, she signed an Authorisation Letter authorising HSBC Singapore to accept instructions from Kishin Kikla in respect of the renewal of her fixed deposit accounts in HSBC Singapore.

It subsequently transpired that on or around 9 May 2001 (after Lalitha had passed away), the amounts of US$4,100,000 and US$683,075.12 respectively were transferred out of Lalitha’s fixed deposit accounts with HSBC Singapore to HSBC Middle East for the purpose of discharging the outstandings owing under the Overdraft Facilities. This transaction was effected notwithstanding that no authorisation was received from Lalitha’s estate. It was not disputed that the transfer was effected upon the instructions of Lalitha’s husband, Kishin Kikla, who has since passed away on 13 January 2002.

The third defendant, Namrata Agarwal also known as Namrata Kikla d/o Kishan Kikla, is the plaintiff’s sister and the co-administrator of Lalitha’s estate. She was joined as a defendant in this suit as required by law, although no substantive claims have been made against her. She is also the sole administrator of the estate of the late Mr Kishin Kikla. For ease of reference, any reference to “the defendants” in this judgment shall be construed as a reference to HSBC Middle East and HSBC Singapore, the substantive defendants in this suit.

The plaintiff’s claim

The plaintiff brought the present action against the first defendant, alleging:

(i) wrongful debit by the first defendant of the total sum of US$4,783,075.12 in breach of the first defendant’s mandate;

(ii) alternatively, failure to repay the Estate all monies standing under Lalitha’s fixed deposit accounts , in respect of which the first defendant is indebted to Lalitha’s estate; and

(iii) breach of an implied term of contract between the first defendant and Lalitha to exercise reasonable care and skill, alternatively, negligence, in effecting the transfer of the monies in Lalitha’s fixed deposit accounts to the second defendant.

As against the second defendant, the plaintiff alleges that:

(i) the monies were paid by the first defendant to the second defendant under a mistake of fact; and

(ii) dishonest assistance or knowing receipt, as the second defendant had received the total sum of US$4,783,075.12, being proper which was the subject of fiduciary duties with knowledge that it was such property, and that Kishin Kikla’s instructions to call on the fixed deposits was a fraudulent breach of such fiduciary duties.

In the affidavits filed and submissions made by the first and second defendants, it was made apparent that a possible defence is that a security interest had been granted by Lalitha during her lifetime in favour of the second defendant, over her fixed deposits as security in the event of default on the Overdraft Facilities. In the second affidavit filed on behalf of HSBC Middle East, its legal counsel, Nasreen Bulos stated that Lalitha had signed certain contractual documents, including a “Pledge Agreement Securing Third Party Obligations”, an “Irrevocable Personal Guarantee” and a “Third Party Guarantee” (collectively, the “HSBC Middle East Securities”) in favour of HSBC Middle East, that purportedly had the effect of creating a lien over the monies in Lalitha’s fixed deposit accounts which were held in HSBC Middle East. Lalitha then authorised the transfer of her fixed deposits from HSBC Middle East to HSBC Singapore in or around November 1999, and HSBC Middle East instructed HSBC Singapore to hold the monies on lien for the benefit of HSBC Middle East. Although the documents constituting the HSBC Middle East Securities were blank (HSBC Middle East’s officers did not sign on these documents and various fields for material information were left blank) save for what appeared to be standard terms and Lalitha’s signature, the defendants maintained that this was their case, and that the merits of their defence was a matter for trial, and not relevant for the purposes of the present applications.

A document entitled “Security Over Deposits with the Bank” was heavily relied on by HSBC Middle East and HSBC Singapore, as evidence that the monies were held subject to the rights granted by Lalitha to HSBC Middle East pursuant to the HSBC Middle East Securities. This document was allegedly executed to give effect to HSBC Middle East’s intention that the fixed deposits be held on lien for its benefit, and was allegedly executed by HSBC Singapore as agent of HSBC Middle East. It is however important to note that the agreement “Security Over Deposits with the Bank” was executed only with respect to the deposit amount of US$661,318.23 with respect to an account number 260-262506-600, which is not the account number of either of the fixed deposit accounts. Bulos also alleges that the arrangement between the first and second defendants are evinced by an internal memorandum dated 24 November 1999 from HSBC Middle East to HSBC Singapore stating that the following:

The defendants also relied on various letters between Kishin Kikla’s companies and HSBC Middle East, in which contemporaneous references were made of HSBC Middle East’s and Kishin Kikla’s companies’ understanding that the Overdraft Facilities were secured by lien with HSBC Singapore over Lalitha’s fixed deposits.

The issues arising in this suit

In the present case, although parties appear to take disparate views as to what are the true issues in dispute in this case, it nevertheless appeared that the case turned on the following issues:

Once the above issues have been settled, the plaintiff’s claims against HSBC Singapore would be determined. If it is established that HSBC Singapore transferred Lalitha’s fixed deposits to HSBC Middle East in the absence of a security agreement, then the plaintiff would be required to establish wrongdoing on HSBC Middle East’s part, ie, that HSBC Middle East dishonestly assisted in a breach of fiduciary duties, or knowing received monies that were paid pursuant to a breach of fiduciary duties.

The applicable legal principles

The applicable general principles were laid down in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460, which has been cited with approval and applied on many occasions in Singapore (see JIO Minerals FZC and others v Mineral Enterprises Ltd [2011] 1 SLR 391 (“JIO Minerals”) at [38]) and summarised by the Court of Appeal in CIMB Bank Bhd v Dresdner Kleinwort Ltd [2008] 4 SLR(R) 543 at [26]:

The Court of Appeal also stated in JIO Minerals at [41] that the list of relevant connecting factors that are to be considered in applying stage one of the Spiliada test are not closed, and depends on the factual matrix of each case. The Court of Appeal also stated that helpful guidance may be found in the following extract from Prof Yeo Tiong Min’s article in Halsbury’s Laws of Singapore vol 6(2) (LexisNexis, 2009):

However it is important to bear in mind the remarks of V K Rajah J in Peters Roger May v Pinder Lillian Gek Lian [2006] 2 SLR(R) 381 at [20], cited by the Court of Appeal with approval in Rickshaw Investments and another v Nicolai Baron von Uexkull [2007] 1 SLR(R) 377 (“Rickshaw”) at [15], as follows:

Thus, the weight of each of the relevant factors in the balance of competing interests must depend on the facts of each case. The merits of the claim or the defence are relevant considerations for the purpose of a stay application on the ground of forum non conveniens.

Stage 1 of the Spiliada test

Availability of the UAE as a forum

According to the defendants’ expert, Samir Kanaan, the UAE is an available forum because the UAE has jurisdiction over HSBC Middle East, which albeit a Jersey-incorporated entity, has registered branches in the UAE. The plaintiff’s expert, Ali Al Aidarous, takes a contrary view. According to both experts, the applicable law is Article 20 of the UAE Civil Procedures Law (Federal Law No 11 of 1982) (“Civil Procedures Law”), which provides:

The plaintiff’s expert asserts that while a registered branch in the UAE can satisfy the Article 20 requirement of “domicile” or “place of residence” for the purposes of establishing jurisdiction, there is no evidence of registration of HSBC Middle East, as opposed to the larger HSBC global group in the UAE. In response, the defendants refers to an affidavit filed by Bulos, the legal counsel of HSBC Middle East on 7 January 2013, in which evidence of a commercial license granted to one “HSBC Bank Middle East Limited (Dubai Branch) since the year 1984 is exhibited. Having regard to the arguments put forward and the evidence tendered, I am satisfied that the UAE courts would have jurisdiction over HSBC Middle East.

The next issue would be whether the UAE courts have jurisdiction to determine the plaintiff’s claim against HSBC Singapore, which undoubtedly is neither “domiciled” nor “resident” in the UAE. Article 21(7) of the Civil Procedures Law of provides that:

As such, the defendants’ expert, Kanaan, takes the position that the Dubai courts would also have jurisdiction over HSBC Singapore in this matter, since the Dubai courts would undoubtedly have jurisdiction over HSBC Singapore and Namrata. The plaintiff’s expert, Aidarous, takes the different position that Article 21(7) would apply only if one of the substantive defendants was domiciled in the UAE. The plaintiff’s expert also contends that Namrata’s domicile is irrelevant as she is only a nominal defendant. The plaintiff also argues (see above at [15]) that the UAE courts have no jurisdiction over HSBC Middle East. As I have already determined that the UAE is an available forum to adjudicate over the plaintiff’s claim against HSBC Middle East, I am unable to accept the plaintiff’s arguments, and find that the UAE courts are an appropriate forum to determine the present dispute.

Residence and place of business of the parties

The plaintiff is resident in Canada, while HSBC Middle East is a Jersey incorporated entity with branches registered and operating in the UAE, and HSBC Singapore operates in Singapore. Namrata, a nominal defendant, is resident in the UAE. I accept that the possibility of the presence of assets in Jersey, Middle East and in Singapore of the respective defendants is a relevant factor in determining the clearly more appropriate forum. However, this factor is at best neutral, given the disparate locations of all the parties involved in a substantive manner.

Location of key witnesses and documents

The defendants assert that the material witnesses and evidence are to be found in the UAE. The defendants argue that the testimony of HSBC Middle East officers are crucial to fill in the gaps in the documentary evidence of HSBC Middle East and HSBC Singapore, as the relevant events had occurred more than ten years ago. The defendants assert that the evidence of relevant officers from HSBC Middle East are crucial in determining whether the monies in Lalitha’s fixed deposit accounts were validly transferred to HSBC Middle East, or pursuant to the fraudulent instructions given by Kishin Kikla with knowledge, participation and/or wilful blindness of HSBC Middle East. HSBC Singapore takes the position that it merely administered the document entitled “Security Over Deposits with the Bank” as an agent for HSBC Middle East, and has no relevant evidence to offer. The defendants also alleged that the evidence of Namrata was crucial, as she allegedly refused to support the plaintiff in his cause of action due to her personal knowledge that his cause of action lacked merit. Further, the defendants submit that Namrata is not compellable in Singapore but is compellable in UAE and hence, this dispute should properly be tried in the UAE.

The plaintiff, on the other hand, claimed that the plaintiff’s claim essentially rests on HSBC Singapore’s alleged wrongdoing, which occurred through its employees and hence, the material witnesses would be located in Singapore. In fact, since the defendants rely on an internal memorandum dated 24 November 1999 from HSBC Middle East to HSBC Singapore as evidence of the security interest in Lalitha’s fixed deposits, the evidence of the addressees of the internal memorandum are also crucial in determining HSBC Singapore’s state of mind in effecting the transfer of the monies to HSBC Middle East at the relevant time. The plaintiff also submits that the plaintiff’s claims do not concern Namrata, and that her opinion on the merits of the plaintiff’s claim has nothing to do with any of the issues raised. In fact, the defendants have never identified the issues for which Namrata’s testimony would be required. Namrata is at best only a nominal defendant who was joined because a co-administrator must be added as defendant if she does not want to be a plaintiff in the action.

The issues, as formulated at [11] above, would determine the most essential witnesses that are to be called to testify at the trial. I agree with the plaintiff’s submission that evidence of HSBC Singapore’s officers is crucial in determining the basis on which HSBC Singapore first accepted and were transferred out of HSBC Singapore. Evidence on whether HSBC Singapore had entered into an agreement with, or received instructions from Lalitha to provide the monies in her fixed deposit accounts as security in the event of a default on the Overdraft Facilities is far more crucial towards the determination of the issues. However, this is not to say that evidence relating to the states of mind of the relevant HSBC Middle East officers who purportedly requested HSBC Singapore to hold the monies transferred from Lalitha’s fixed deposit accounts in HSBC Middle East in on around November 1999 on lien for HSBC Middle East is irrelevant. The issue is not whether HSBC Middle East had instructed HSBC Singapore to transfer the fixed deposits at the instance of fraud perpetuated by the late Kishin Kikla, as that per se would not absolve the defendants of liability to Lalitha’s estate under the various causes of action brought by the estate. What was material was the state of mind of the relevant officers HSBC Middle East, what needed to be resolved between the plaintiff as against HSBC Middle East was whether HSBC Middle East was liable for any dishonest assistance or knowing receipt. Thus, the key witnesses that would need to be called at trial would conceivably be from both the UAE and Singapore. Hence, the location of witnesses does not favour either the UAE or Singapore as the clearly more appropriate forum.

In any event, I am of the view that the location of key witnesses and documents is neither here nor there because there is no reason offered by the defendants for why the HSBC Middle East employees cannot travel to Singapore to give evidence. Likewise, there is no reason why the relevant HSBC Singapore officers cannot travel to the UAE to give evidence.

Since all the relevant documents are either in both Arabic and English, or in English, there is similarly no reason why the relevant documents cannot be transported to Singapore for the purposes of a trial. On the other hand, there does not appear to me any reason why the relevant English documents cannot be translated into Arabic, if the trial was to take place in the UAE. Thus, the location of key witnesses and documents are at best neutral factors in the consideration of whether the UAE courts are the clearly more appropriate forum to determine the parties’ dispute.

Existence of non-exclusive jurisdiction clause

The fixed deposit accounts are governed by HSBC Singapore’s general terms and conditions governing accounts, and cl 23.2 of the latter provides as follows:

Furthermore, cl 14.02 of the agreement entitled “Security Over Deposits with the Bank” executed by Lalitha and HSBC Singapore provides that:

The plaintiff submits that where a non-exclusive jurisdiction clause exists in favour of Singapore, strong cause must be shown by the party seeking a stay in favour of another jurisdiction, and that the existence of such a clause creates a strong prima facie case that Singapore is an appropriate forum. In support, the plaintiff cites the following extract from a decision of Chan Seng Onn J, Citibank NA v Robert [2011] 3 SLR 465 at [12]-[15]:

The plaintiff also relies on PT Jaya Putra Kundur Indah v Guthrie Overseas Investments Pte Ltd [1996] SGHC 285 in which Lai Siu Chiu J, in construing the effect of a non-exclusive jurisdiction clause in favour of Indonesia, held at [64]:

The case of Orchard Capital I Ltd v Ravindra Kumar Jhunjhunwala [2012] 2 SLR 519 (“Orchard Capital”), although included in the plaintiff’s bundle of authorities, was not specifically highlighted in the plaintiff’s submissions. In Orchard Capital at [24]-[25], Andrew Phang Boon Leong JA stated that there are two possible central strands of analysis concerning non-exclusive jurisdiction clauses, as follows:

It is important to note that in Orchard Capital at [26], Phang JA cautioned against taking Orchard Capital as authority for a wholehearted acceptance of the first central strand by the Court of Appeal, as its application is not without difficulties. On the facts, the second central strand was applied to the facts. In the present case, the plaintiff appeared to have treated the existence of a non-exclusive jurisdiction clause as one of the factors to be considered in determining whether the UAE is a clearly more appropriate forum, applying the Spiliada principles (see above at [12]). The plaintiff therefore appears to be making an argument along the lines of the second central strand as envisaged in Orchard Capital, ie, that the existence of a non-exclusive jurisdiction clause is a relevant factor in applying the Spiliada principles, as opposed to the first central strand, although the plaintiff has urged the court to require strong cause to be shown for reneging on a non-exclusive jurisdiction clause is typically applied where proceedings have been commenced in breach of an exclusive jurisdiction clause.

Thus, applying the second central strand of analysis as propounded in Orchard Capital, the non-exclusive jurisdiction clause in favour of Singapore is a factor which the court can consider in deciding whether or not the present action ought to be stayed. However, the weight of this factor is not significant, as there is no indication that the parties intended the non-exclusive jurisdiction clauses to indicate that the UAE is an inappropriate forum, or, conversely, that Singapore is to be the most appropriate forum. Notably, cl 14.02 of the agreement entitled “Security Over Deposits with the Bank” explicitly provided that the submission to the non-exclusive jurisdiction of Singapore was not to affect the right of the plaintiff to sue in another jurisdiction. Thus, while the presence of the non-exclusive jurisdiction clauses are relevant in determining whether Singapore is the forum non conveniens, this factor does not clearly demonstrate whether the UAE is a clearly more or less appropriate forum to determine the dispute.

Governing law of the claims

Choice of law issues are relevant to the question of jurisdiction, for the reasons stated in Rickshaw at [42]:

With respect to HSBC Middle East, the causes of action relied on by the plaintiff are in dishonest assistance, knowing receipt and restitution. Both parties do not dispute that dishonest assistance is to be classified as a tort for the purpose of determining the governing law: see OJSC Oil Company v Roman Arkadievich Abrahamovich [2008] EWHC 2613 (Comm). Hence, the choice of law rule is that of double actionability and the lex loci delicti is relevant in determining the more appropriate forum: see JIO Minerals at [110]. Parties also do not dispute that moneys paid under a mistake of fact and knowing receipt are characterised as restitutionary claims: see Thahir Kartika Ratna v PT Pertambangan Minyak dan Gas Bumi Negara (Pertamina) [1994] 3 SLR(R) 312 at [31]-[32] and [37].

With respect to tortious claims, parties also do not dispute that the applicable principles have been set out in Rickshaw at [37], viz, that the location of the commission of the tort is prima facie the natural forum. The court ought to examine the events constituting the tort and ask itself where in substance did the cause of action arise. The defendants submit that the crux of the plaintiff’s claim centers upon wrongdoing committed in Dubai, and that its claims against HSBC Middle East are the “primary claims”. This is because the alleged wrongdoing by Kishin Kikla by way of issuance of fraudulent instructions occurred in Dubai, and any alleged dishonest assistance on the part of HSBC Middle East must have occurred in Dubai, where HSBC Middle East applied the monies transferred from Lalitha’s fixed deposit accounts to discharge the outstandings under the Overdraft Facilities.

The plaintiff, however, submits that the crux of its tortious claim lies in Singapore because:

The plaintiff also urges the court to look beyond the manner in which the causes of action are framed, and to identify the true issues in dispute for the purpose of determining the proper law governing the dispute between the parties. Indeed, the proper approach is to look beyond the formulation of the claim and to identify, according to the lex fori, the issues thrown up by the claim and defence (see Macmillan Inc v Bishopgate Investment Trust PLC and others (No 3) [1996] 1 WLR 387 (“Macmillan”) at 407). As Staughton LJ held in Macmillan at 388-399, the rules of conflicts of laws are directed at the issue of law in dispute, rather than the cause of action on which the plaintiff relied. This statement was endorsed by Andrew Ang J in Murakami Takako v Wiryadi Louise Maria and others (No 2) [2008] 3 SLR(R) 198 at [41]. When one turns to the affidavits filed on behalf of the defendants, it appears that HSBC Middle East’s defence is essentially, that it was entitled to call on the fixed deposit accounts in Singapore pursuant to a security arrangement, and that this defence would turn on the interpretation of the relevant banking documentation and terms therein. Indeed, if the defendants had the contractual basis to assert their rights over the monies in Lalitha’s fixed deposit accounts, then the plaintiff’s claims against both the defendants must fail as the defendants were doing no more than exercising their contractual rights. Hence, the liability of the defendants would turn on the interpretation of the document entitled “Security Over Deposits With the Bank” which purportedly created the security which both of the defendants were entitled to rely on. HSBC Singapore would be entitled to transfer the fixed deposits to HSBC Middle East if the agreement gave it the legal right to do so, and HSBC Middle East would be entitled to receive the fixed deposits, as the execution of the agreement, “Security Over Deposits With the Bank” was a means of executing its instructions to HSBC Singapore to create a lien over the fixed deposits, pursuant to Lalitha’s mandate as embodied in the HSBC Middle East Securities. It would therefore be essential to look to the governing law of the contract “Security Over Deposits With the Bank”, which is Singapore law, to resolve this issue.

The same reasoning would apply to the plaintiff’s claim against HSBC Middle East for restitution, as there would be no valid cause of action in restitution if HSBC Middle East was merely asserting its contractual rights. The applicable choice of law rule in restitution claims has been stated in CIMB Bank Bhd v Dresdner Kleinwort Ltd [2008] 4 SLR(R) 543 (“CIMB Bank”) where the Court of Appeal cited with approval Rule 230 of Dicey, Morris and Collins on the Conflict of Laws (Sweet & Maxwell, 14th Ed, 2006) (“Dicey, Morris and Collins”), at [31]:

The defendants urged the court to hold that the applicable rule is Rule 230(2)(c) as the parties’ dispute did not arise in connection with a contract or an immovable property. The plaintiff submits that quite clearly, the applicable rule is 230(2)(a), since the right to restitution must arise from the failure of the document entitled “Security Over Deposits With the Bank” to create a security interest over the fixed deposits in favour of HSBC Middle East. In support, the plaintiff cites the following extract from CIMB Bank at [34], which cites with approval the following extract from Dicey, Morris and Collins:

I am of the view that the applicable limb is 2(a) of Rule 230. The reason is that the dispute concerns a purported agreement to provide security in respect of the fixed deposit accounts. The issue is whether HSBC Middle East lacked contractual basis (on the basis of the document entitled “Security Over Deposits With the Bank” which was allegedly executed by HSBC Singapore as HSBC Middle East’s agent) to assert a lien over the moneys in the fixed deposit accounts, and thus, can be said to arise in connection with a contract. Thus, while the claims for restitution on the basis of mistaken payments and knowing receipt are restitutionary claims, the dispute turns essentially on contractual interpretation and thus can be said to arise in connection with a contract. Hence, Rule 230(2)(a) applies, and the applicable law is Singapore law.

I now turn to the claims in contract, the tort of negligence, and breach of fiduciary duties vis a vis HSBC Singapore. I do not understand the defendants to be making submissions that Singapore law is not the governing law with respect to these claims. All that the defendants submit is the plaintiff’s claims against HSBC Singapore are parasitic on the claims against HSBC Middle East. For the reasons stated above at [33], I am of the view that the dispute between the parties turns on the construction of the agreement, “Security Over Deposits With the Bank”, which is governed by Singapore law. It is clear on the facts that any alleged tort or breach committed by HSBC Singapore would have been committed in Singapore and therefore closely connected to Singapore.

Enforceability of judgment obtained in Singapore

The defendants submit that even if the plaintiff was successful in his claim and obtained judgment in Singapore, he would have to re-litigate the matter in the UAE because the Singapore judgment would not be enforceable in the UAE. The defendants’ UAE law expert, Kanaan, states that a foreign judgment is unenforceable in the UAE where the UAE courts have jurisdiction to try the case. The defendants urge the court to depart from High Court authorities such as Ang Ming Chuang v Singapore Airlines Ltd (Civil Aeronautics Administration, Third Party) [2005] 1 SLR(R) 409 (“Ang Ming Chuang”) at [54], in which it is held that the plaintiff’s inability to enforce a judgment in a foreign jurisdiction is not a factor which a defendant may raise in favour of a stay application. The defendants submit that the rationale articulated by the High Court in Ang Ming Chuang for its holding, viz, that the plaintiff ought to bear the consequences of unenforceability since it was its own decision to sue in the forum in question, is not applicable in the present case, as the defendant would be unjustifiably open to the risk of a second round of proceedings in the UAE. The defendants submit that Ang Ming Chuang is inconsistent with the Court of Appeal decision of Murakami Takako (executrix of the estate of Takashi Murakami Suroso, deceased) v Wiryadi Louise Maria and others [2009] 1 SLR(R) 508 at [36], in which it was held on the facts that the enforceability of an Indonesian judgment in other jurisdictions is an important consideration which it could not ignore in arriving at the conclusion that Indonesia was the more appropriate forum.

The plaintiff submits that the enforceability of Singapore judgments in the UAE is irrelevant, because the court ought to be concerned with the appropriateness of the forum for the trial process, as opposed to the enforceability of judgments, citing in support the local High Court decision of Ismail bin Sukardi v Kama bin Ikhwan and another [2008] SGHC 191 (“Ismail bin Sukardi”) at [27]. Further, the plaintiff’s UAE law expert, Aidarous, is of the view that the plaintiff will be able to enforce a Singapore judgment in the UAE without re-litigation of the matter. In any event, the plaintiff has submitted that if the plaintiff is successful in obtaining a judgment in Singapore, that judgment can be enforced in Jersey, as HSBC Middle East is a Jersey incorporated entity. In support, the plaintiff has adduced an expert report from a Jersey law expert to that effect, which has been unopposed by the defendants.

I should first of all, note that in the affidavit filed by the defendants’ own expert, Kanaan, on 27 August 2012, he acknowledges Article 92 of the Civil Procedures Law of the UAE may prevent the plaintiff from bringing a claim in the UAE after the matter has been determined in Singapore, although it makes no specific reference to matters previously determined in foreign proceedings. Article 92 provides that:

Therefore, the possibility of re-litigation of the matter in the UAE may be more apparent than real, as Article 92 could have the effect of preventing re-litigation of a dispute previously determined by a foreign court.

With respect to the authorities cited in relation to this issue by the parties, I note that in Murakami, the Court of Appeal was commenting on the relevance of the enforceability of judgments as a relevant factor in applying the Spiliada principles on forum non conveniens. However, while the enforceability of judgments in other jurisdictions may generally be a relevant factor, I am of the view that the plaintiff’s clearly demonstrated intention to pursue a claim in a jurisdiction and run the risk of unenforceability of the claim in another jurisdiction is also a critical factor that cannot be overlooked: see also Ang Ming Chuang at [54] and Ismail bin Sukardi at [27]. I am of the view that the plaintiff ought to be held to its election of jurisdiction in which to sue and bear the risk of unenforceability in other jurisdictions. While there are differing views taken by the respective UAE law experts on the enforceability of Singapore judgments in the UAE without the need for re-litigation, there is nevertheless unopposed expert evidence to the effect that Singapore judgments are enforceable on HSBC Middle East in Jersey. As that is the plaintiff’s chosen manner of enforcing any judgment it might obtain if it was successful, I am of the view that it ought to bear the consequences of its decision, and hence, this factor is to be regarded as neutral.

Conclusion on the first stage

In conclusion, the balance of relevant factors leads to the conclusion that the UAE is not the clearly more appropriate forum to hear the dispute, as none of the relevant factors point towards the UAE as the clearly more appropriate forum.

The second stage

Having arrived at the conclusion above at [39], there is no need to consider the second stage of the Spiliada test. Nevertheless, the second stage will be considered for completeness. The applicable principles have been set out in Brinkerhoff Maritime Drilling Corp v PT Airfast Services Indonesia [1992] 2 SLR(R) 345 and endorsed by the Court of Appeal more recently in Rickshaw at [19]:

Assuming that the prima facie natural forum is the UAE, the question is whether a stay should nevertheless not be granted for reasons of justice.

Relevance of time bar

It is not disputed by both parties’ UAE law experts that the plaintiff’s claim is time-barred in the UAE. The three year limitation period had begun running from the plaintiff’s awareness of the purported harm to Lalitha’s estate, and that three-year period has been spent.

The defendants submit that the issue of time bar is really a neutral factor, since granting a stay would defeat the plaintiff’s claim altogether, and refusing a stay on the other hand would deprive the defendants of their accrued rights. Assuming that UAE law was to apply as the governining law over the parties’ dispute, the defendants also contend that limitation period is a “substantive” rather than “procedural” issue which ought to be governed by UAE law. Hence, the plaintiff’s action would also be time barred in Singapore. Furthermore, since the plaintiff has provided no credible reason for allowing the time bar to lapse since the plaintiff discovered the transfer of monies as early as 2002, or 2006 or 2007, it should not be allowed to take advantage of the more generous limitation period in Singapore. Thus, a stay ought to be granted.

The plaintiff submits that it would be unjust to stay the suit as the plaintiff would not be able to pursue its claim against HSBC Middle East in the UAE, and given that Singapore law is the governing law for the plaintiff’s claim against HSBC Singapore, it would be unjust for the plaintiff to be forced to pursue its claim against only HSBC Singapore in the UAE, when the Singapore courts are in the best position to apply Singapore law to determine the substantive dispute between the parties. The plaintiff takes the position that although the plaintiff had become aware of the fund transfer from HSBC Singapore to HSBC Middle East in 2002, as a result of his “personal circumstances”, it was only in 2006 or 2007 that he “got a better picture” of the circumstances under which the monies in the fixed deposit accounts were wrongfully transferred to HSBC Middle East. Thereafter, the plaintiff was involved in defending a lawsuit brought by the Emirates Bank against him, which resulted in him only taking legal advice on his claims in 2009, by which time the limitation period in the UAE had already lapsed.

Having determined that Singapore law would govern the dispute between the parties (see above at [32]-[34]), I need not deal with the defendant’s argument that the substantive law which is applicable is UAE law. I turn now to the case of Spiliada, where Lord Goff set out the relevant considerations when an action may be time barred in a foreign jurisdiction, at 483-484:

Applying the above principles, with an aim to doing practical justice, the question which has to be answered is whether the plaintiff acted unreasonably in allowing the time bar in the UAE to lapse? A close examination of the relevant facts is required to answer this question.

The plaintiff’s explanation for not commencing action immediately upon his awareness of the transfer of the monies out of Lalitha’s HSBC Singapore fixed deposit accounts in 2002 is set out in the plaintiff’s affidavit dated 2 October 2012 at para 82:

The plaintiff then further elaborated in his affidavit filed on 3 December 2012 on the reason for the reasons for delay in bringing the present action, at para 38:

The plaintiff then brought an action in Singapore in 2009 against HSBC Singapore. However, shortly thereafter, the plaintiff and HSBC Singapore caused a consent order to be entered pursuant to an agreement to settle the dispute, allegedly because he was wrongly advised that his claim was time-barred under the Limitation Act. Upon realising its mistake, the plaintiff brought this present action, this time, in his capacity as the beneficiary to Lalitha’s estate. The defendants have since brought an action to strike out the present action on the ground that the parties have previously entered into an agreement to compromise their dispute. That application to strike out succeeded at first instance, but the first instance decision was overturned on appeal.

The plaintiff’s explanation that in 2002, when he first discovered the transfer of the fixed deposits from HSBC Singapore to HSBC Middle East, he did not suspect any wrongdoing, does not appear to me to be inherently incredible. There also does not appear to be any reason why the plaintiff’s explanation that his preoccupation with his “personal circumstances” resulted in him discovering some relevant documents only in 2006 or 2007 cannot be believed. It was not disputed that Emirates Bank did commence an action against the plaintiff in the Supreme Court of British Columbia, but that suit was only filed in November 2008. It is not inconceivable that the plaintiff may have discovered further documents only in 2009, when his wife was going through documents to assist the plaintiff in defending the suit against Emirates Bank, which was when he decided to bring an action in Singapore.

In fact, the plaintiff explained in his affidavit filed on 3 December 2012 that when he first commenced an action in Singapore in October 2009 against HSBC Singapore, the plaintiff was solely concerned with pursuing its claim against HSBC Singapore for breach of mandate and its duties as a banker at the material time. The plaintiff also averred that he subsequently made attempts to contact HSBC Singapore for more information, but none was forthcoming, because HSBC Singapore needed time to retrieve documents dating as far back as in excess of 10 years ago. It was only on 6 May 2012 that HSBC Singapore informed the plaintiff by letter that it was unable to assist in the plaintiff’s inquiry. That resulted in the plaintiff serving the writ on HSBC Singapore. Subsequently, HSBC Singapore took out SUM 3638 of 2010 to strike out the suit, alleging that it was time-barred, and that culminated in the consent order which the parties entered into, with the plaintiff being under the mistaken belief that ithe action was time-barred.

Given the procedural history, it cannot be gainsaid that the plaintiff was being dilatory or that the plaintiff has deliberately allowed the time bar to lapse in the UAE. Therefore, on the assumption that the UAE is the natural forum to determine the dispute between the parties, the plaintiff would be time-barred from pursuing its cause of action against the defendants, in the UAE, thereby suffering prejudice through no fault of his. As such, on the assumption that the UAE is prima facie the natural forum, I am of the view that a stay should not be granted, so that the plaintiff can be allowed to proceed in Singapore against the defendants.

Conclusion